Buying kids house for cash

Pixie5740

There was this thread not so long ago where the parents put a property into their adult son's name so that he became the legal owner but they were still the beneficial owners receiving the rent.

I suppose you'd need to find out exactly how your ex sees this working. Would your sons be both the legal and beneficial owners? What exactly are your ex's intentions and would it be easier just to give the boys £100k each just now or kept in trust until they're a bit older? Property is just illiquid and should they ever want the money then they'd both have to agree to sell or buy the other out.

https://forums.moneysavingexpert.com/discussion/5474532

densol_2

Pixie5740 wrote: »

There was this thread not so long ago where the parents put a property into their adult son's name so that he became the legal owner but they were still the beneficial owners receiving the rent.

I suppose you'd need to find out exactly how your ex sees this working. Would your sons be both the legal and beneficial owners? What exactly are your ex's intentions and would it be easier just to give the boys £100k each just now or kept in trust until they're a bit older? Property is just illiquid and should they ever want the money then they'd both have to agree to sell or buy the other out.

https://forums.moneysavingexpert.com/discussion/5474532

Thanks Pixie. My ex is not a generous man. He would only be doing this to benefit himself in some way - not out of the goodness of his heart.

Argghhh

sounds like a scam - he is doing it to create rental income for himself avoiding the tax consequences and the capital gain if he chose to make them sell it in the future

tlc678910

Hi,

It sounds to me like your ex wants to do this to avoid the extra 3% stamp duty (assuming your ex already owns property) and to benefit from your sons unused tax free allowance or their lower taxation rates (to pay less tax on the rent received).

From what you describe it sounds like your ex doesn't actually want your sons to "really" own the properties and receive the rent but to put their names to the properties while having to do as they are told. I think the main reason to avoid in my opinion is being impossibly entwined with a controlling parent.

If your ex burns through the money from his mother or has a hairbrained scheme your children could in future be put under pressure to mortgage the properties making it impossible for them to get their own mortgages on homes for themselves.

Tell your ex if he wants to gift the children money or a house to go ahead but only if it will genuinely be theirs (to sell, rent out or live in). If it will not be theirs just say no. It is not his children's job to reduce his tax burden.

Tlc

Kynthia

Why invest it in property? They'll be liable for tax on the rental income, have to comply with many landlord regulations with the chance of being taken to court if they don't, CGT if they sell, second property stamp duty rates if they buy somewhere to live in, and be at risk of any other future regulations the government brings in for landlords.

Either gift them the money or invest it for them with the help of an IFA, which may be a better financial decision than property.

Mojisola

densol wrote: »

My ex ( not husband ) has inherited a lot of money from his mother. He wants to buy a house in the kids name ( aged 17 and 19 ) and rent it out.

Its for me to protect the kids interest and make sure they are not taken advantage of as he would if he could. I think he intends to spend around £200k ( no mortgage )

If he insists on going ahead with buying a house which will be in their names, don't fight it.

If your sons want to sell the house at any point, they can.

NYM

What if he were to put a Charge on the property, effectively making it impossible for the children to sell without his permission?

Mojisola

NYM wrote: »

What if he were to put a Charge on the property, effectively making it impossible for the children to sell without his permission?

Then he wouldn't have given his sons the money to buy it; he would have loaned it to them.

They don't have to take on a loan from him. No loan, no house.

NYM

I don't know the reasons densol has for mistrusting him, but she does.

All we know, is that he's proposed purchasing the property in her childrens names and for them to become Landlords but that he would in all probablitly, take the rent for himself.

None of the problems - all of the benefits.

I wouldn't trust him and I don't know him...;)